you will be losing your CGT exemption on the portion of the property rented out. A few dollars saved in tax now could cost you thousands down the track.

If you are thinking of using the mums property to get a loan it won:t be that easy, especially if she is not working. lenders are extremely reluctant to do this.

Thats right Dan. You will only be able to borrow a certain % of both properties – usually up to 90 or 95%. So I think Mick has to keep saving and/or wait for some growth to kick in.

Using a trust won:t help in this regard.

A trust is easy to set up – You could draw up a deed yourself or do a verbal declaration of trust – but you will want something that is professionally done and this will cost you around $1000 plus you will need some advice on how to use it, get TFN, ABN etc. You may even need a company to operate as trustee and that will cost another $800 or so. Then there may be stamp duty on the trust – this is $550 in NSW now, but may be nil in other states.

Running costs may not be much more than you are paying now. Most accountants charge a fee per property so adding properties in your own name adds to the fees – a trust with a few properties would cost around the same as an individual with a few properties. It may be a bit more if it gets more complicated later on.

What do you mean by vendor finance?

If you are talking about only giving the owner part of the amount upfront and the rest later then this is essentially the vendor lending you money. Your purchase price will be the full amount agreed upon. Title will transfer at settlement and the vendor will be liable for CGT then in the tax return for that financial year.

If you are giving them cash and units then I think it CGT will be based on market value of the cash and hte units together. Title will change from them to you and then partially back to them again, stamp duty too. There is a way around this possibly, but it won:t work if a loan will be needed – unless you can get them to guarantee your loan.

A post mortum sub division?

Dont take tax advice from a broker! Lucky you know he is wrong, but I wonder how many other people have been scared off by him!!

I feel the same about the market. It seems overheated – but Sydney will always be growing in poplulation over the short term at least.

This would be correct in terms of interest payable – in Theory. You will end up with large sums of cash in your offset and what happens is that many people go out and spend it, when otherwise they wouldn:t. So you need to be disciplined or it could be worse off in the end.

Deductions?will depend on what the money is used for and who is the owner of the asset being purchased.

eg if you buy a property in your name only you will claim the deductions. If you use a wife as guarantor it won:t matter for the claiming of deductions, you will still g et all the deductions and profits/losses.

Sounds good, but why a LOC for the IP? you can get into trouble using these

Sounds dangerous to me. eg. what happens if the hot water system needs replacing??Your?Positive geared property suddenly becomes negative and you have no potential of growth – so whats the point?

What are the rates, repairs etc all adding up to?